BUZZ-BP: BofA downgrades to "underperform", warns on risk to dividend

** BP down more than 3 pct after BofA-ML cuts rating on stock to "underperform" and warns of growing risks to co's dividend and potential for M&A that could be financed by stock

** Stock is among the top losers on a rough day for the FTSE 100

** BofA-ML says brent oil prices not to recover far above $60/bbl until 2018 which would mean BP likely to run into persistent and sizeable free cash flow shortfalls for the foreseeable future

** So far a dividend cut at BP avoided by suspending buybacks, asset disposals and cost cuts, BofA-ML says, but broker believes investors concerned about lack of future options

** Maintaining dividend coverage would require a further $5bln cut in annual capex, BofA-ML estimates, and increases the risk that BP resorts to M&A

** Oil's slide since last June has spurred at least 11 stock rating cuts on BP from analysts

(RM (LSE: RM.L - news) : esha.vaish.thomsonreuters.com@reuters.net)